Cryptocurrency is known to be volatile, and both new and seasoned investors are well aware of its risks. But the recent crash of FTX, one of the world’s largest crypto exchanges, has resulted in tremendous shock waves going through the crypto world. While the rest of the world is unable to fathom the situation, backing away from crypto, there is one section of investors that isn’t jostled by the news – the large institutional investors.
When the news of the collapse hit the stands in November, crypto exchange Bitstamp recorded a surprising statistic – institutional registrations within its digital asset trading platform were up by 57%. Even as the FTX collapse was headlining, these institutional investors refused to back down. Bitstamp also noted that its total revenue was up 45% in the same period – with instructional investors alone making up a whopping 34% of its revenue.
Traditional investors had a different approach to crypto investments before. With the FTX collapse, analysts predicted a drop in investments – but it had quite the opposite effect.
The exchange’s collapse resulted in the de-risking of crypto. Instead of quitting out of fear, the collapse emboldened investors. Traditional finance capital allocators saw this time as the perfect opportunity to enter the market.
On December 6, mere weeks after the collapse, investment banking firm Goldman Sachs issued an official statement expressing its intent to invest in cryptocurrency. Its executive Mathew McDermott revealed that the firm has already begun doing its due diligence, seeking out suitable opportunities for investment.
Further, a digital assets organization also released a survey that revealed the effects of FTX collapse on a sudden surge in cryptocurrency demand, including the rise in institutions holding crypto.